By Dylan Tokar
Spanish telecom company Telefónica has agreed to pay more than $85.2 million to resolve an investigation into an alleged scheme to bribe Venezuelan officials to obtain preferential access to U.S. dollars, the Justice Department said.
A Telefónica subsidiary entered into a settlement with federal prosecutors filed in U.S. court in Manhattan on Friday. The agreement charges the subsidiary with conspiring to violate the Foreign Corrupt Practices Act, a law prohibiting companies from bribing foreign officials to secure a business advantage.
The settlement marks the second time a Telefónica subsidiary has been fined for violating the 1977 antibribery statute.
The company, which is listed on the New York Stock Exchange, didn't respond to a request for comment.
The allegations
At the center of the latest probe are state-run auctions through which Venezuela's government regulates foreign currency exchange and injects U.S. dollars into the country's economy.
In 2014, Telefónica Venezolana participated in a government-sponsored currency auction to exchange Venezuelan bolivars for U.S. dollars. Behind the scenes, the company bribed government officials to ensure it would secure U.S. dollars needed to maintain its position in the Venezuelan telecommunications market, according to prosecutors.
To do that, it recruited two suppliers to pay around $28.9 million to an intermediary, knowing some of the funds would reach government officials in the form of a "commission," prosecutors said.
To conceal the payments, Telefónica Venezolana covered the cost of the bribes by purchasing equipment from the suppliers at inflated prices. The company ultimately secured more than $110 million at the auction, or more than 65% of the awarded funds, prosecutors said.
The settlement
Prosecutors have agreed to dismiss the bribery charges against Telefónica Venezolana if it continues cooperating and takes steps to improve its compliance programs, in what is known as a deferred prosecution agreement.
The Justice Department in a statement credited the company for making employees based outside the U.S. available for interviews, and disciplining employees involved in the misconduct. The company also built out an independent compliance function and appointed a chief compliance officer with direct access to the audit committee of its board, prosecutors said.
But the department said Telefónica Venezolana failed early on in the investigation to turn over certain records and important information prosecutors needed.
Prosecutors also pointed to the company's past record of misconduct. Telefónica's Brazilian subsidiary in 2019 agreed to pay a $4.1 million fine to the U.S. Securities and Exchange Commission over civil violations of the FCPA.
Write to Dylan Tokar at dylan.tokar@wsj.com
(END) Dow Jones Newswires
November 08, 2024 18:09 ET (23:09 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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